ANZ chief economist Saul Eslake said: "One of the things the Reserve Bank has cited as a reason not to cut interest rates up to this point is concern about people thinking the party is on again, and going and borrowing."");document.write("

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CommSec senior analyst Craig James said: "What an immediate interest rate cut could end up doing is just reinvigorate the housing boom, and that is something the Reserve Bank would be keen to avoid."

Australians have borrowed heavily during a decade of falling interest rates that has pushed up house prices and made buying a home less affordable.

The good news for Victorians is that houses became more affordable in the last quarter because average earnings rose faster than the cost of paying a mortgage, according to data from AMP and the Real Estate Institute of Australia.

Figures released yesterday show that the building boom in Victoria is continuing. According to the Building Commission, projects valued at $1.3 billion were approved in May. Acting Premier John Thwaites said it was the fourth billion-dollar month in a row for building approvals.

Earlier this month, banks and their smaller rivals cut fixed lending rates ahead of an anticipated cut in official rates by the Reserve Bank.

Although yesterday's US cut disappointed financial markets, Treasurer Peter Costello said it was good news for Australia.

"We think that that will provide additional stimulus to the American economy, which has been very sluggish," Mr Costello said. "The fact that the American authorities are now reacting and trying to stimulate the American economy will be a positive for Australia."

Disappointment over the size of the US cut drove the sharemarket down more than 1 per cent yesterday. Banks were hit hard, with Commonwealth Bank falling 57 cents and National Australia Bank 61 cents.